Inflation is cooling but gas prices are spiking. Mortgage rates rose above 7% in August for the first time in 22 years, and they might not be done going up. Fears of an imminent recession have diminished, but not disappeared. The labor market remains tight despite the rising inflation numbers. And for certain sectors, especially manufacturing, supply chain disruption is still a huge challenge.
If you’re a business owner, all of this adds up to uncertainty and anxiety.
And if you’re a policymaker, it all should be a reminder that the state and national outlook is still mixed. Employers need leaders who will be champions for the economy and work to provide stability and predictability, especially regarding taxes and regulation.
Two new reports help shed light on what employers are facing and what they see ahead for their own businesses and beyond.
The first is a new survey of Washington employers. The most recent quarterly survey of nearly 500 businesses found that, while there is good news, employers still face major challenges with inflation and a shortage of workers.
Employers were a bit more optimistic than they were in the spring, with 31% saying our state’s economy is doing well, and only 17% saying it’s weak. Still, more than half say the state is somewhere in the middle — a lukewarm economy, you might say.
When it came to asking how their own business is doing, 36% say their business is growing, while 18% are beginning to experience a downturn and 5% say they are truly struggling. The most, 42%, say business is flat. Again, employers are swimming in tepid waters.
Diving deeper into the data, we see that some industry sectors continue to face major challenges. More than one in three Washington manufacturers (37%) say that supply chain issues continue to be a major disruption. Half of the state’s manufacturers continue to see double-digit inflation, with one in five manufacturers facing major price increases of more than 20%.
To understand the impacts of these ongoing challenges, the Association of Washington Business (AWB) has pulled together a panel of experienced economists. The AWB Council of Economic Advisors includes former top state financial leaders and economists from some of our state’s leading private businesses.
Their latest report, called the Washington Business Outlook, was just released. As with the employer survey, the overall picture is cloudy.
Arun Raha, the state’s former chief economist, said “the overall economic picture is mixed. Risks remain elevated.”
Agricultural economist Desmond O’Rourke notes that prices are up for some key Washington products, like potatoes and apples, but are down for wheat and sweet cherries.
“Looking ahead, the surge in the cost of major inputs appears to have abated but the average costs of production have continued to rise across the board,” O’Rourke wrote.
As always, businesses will adapt and work to support their communities and employees. Legislators and policymakers should remember that, in these uncertain times, employers need all the support they can get.
Copies of the summer AWB employer survey and the Washington Business Outlook are available at www.awb.org.
Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.